Top tips for identifying the right project KPIs to deliver success
If you work in the project world, you’ll be familiar with Key Performance Indicators (KPIs). They help to measure the success of a project based on key business goals - and should align with the wider strategy of an organisation. They’re useful to project managers because they demonstrate how work is progressing and can draw attention to any areas of weakness that need correction.
Project management KPIs aren’t to be confused with metrics which are more operational and help measure performance or progress for specific business activities. Only the most important metrics will be used as KPIs - and it’s important to have a limited number to help meet the project objective and create true indicators of success.
A common problem we see in our industry is KPIs existing in companies that don’t link to a specific objective. It may be that some metrics will be requested as contractual requirements by clients, but these won’t always add value to a project from a delivery perspective. If this is the case, it’s vital to have a strong set of carefully considered KPI’s alongside these to ensure your project stays on track.
There are lots of standard metrics industry-wide that you can develop into KPIs, but there’s no universal framework for selecting them - this is an art form in itself. While there’s not a set right or wrong way, there are useful considerations our team will make when choosing project management KPIs. As one of our Directors, Andrew put it, “the more time you spend measuring things you don’t need to measure, the more resource wasted in your organisation”.
Think about the benefits
An important first step before selecting your KPIs on a project is to consider the benefits you want to drive in the organisation. A benefit can best be described as the positive consequence of a change and a project is a vehicle to deliver this benefit to its stakeholders, whether it be improved quality, reduced costs and so on. Identifying and measuring these benefits will allow you to maximise the outcome of your project. According to the PMI, many organisations don’t measure benefits - but this should be a bare minimum as without, it becomes very hard to meet project expectations post-completion. Equally, without these benefits agreed upon, you will be plucking metrics out of thin air, rather than choosing specific and meaningful KPIs that help keep your project on track.
Consider the industry
KPIs are conditioned to specific industries so it’s important to be aware of this and tailor your KPIs to each organisation. At Blueprint, we may be working on a nuclear and rail project at the same time, but the metrics are different for each. A good tip is to have an understanding of the industry standard and use this as a benchmark to give context to your clients when selecting or reporting on KPIs.
Be aware of limitations
There will be times when you are reporting on project management KPIs where the underpinning information isn’t at a place where you can rely on it, potentially resulting in misinformed decision making, leading to roadblocks in your project. Making limitations and assumptions clear are vital to understanding the integrity of data and which metrics you consider reliable enough to focus on.
Kpis need to be relevant and insightful to communicate to stakeholders
A kpi is only helpful if it can generate insights so that a project decision can be made. Be proactive when selecting kp is rather than reactive, asking yourself does it answer the ‘so what’ question i.e. should my client be worried or happy? A kpi that answers this will be vital for highlighting where a project is failing which prompts management to drill down to the details of what is going wrong and fixing the issue. Equally, kp is that monitor project health and forecast trends are crucial to take corrective actions, so it’s a good idea to pin down how you will measure performance over time.
Include a blend of lag and lead indicators
Many project management KPIs tend to be backwards-looking rather than forward-looking. The terminology to differentiate these is a lagging or leading indicator. For instance, leading indicators predict future conditions but lagging indicators assess the current state of the project. The issue with relying on lagging indicators is that while they are easier to measure, they are harder to change. Leading indicators are more dynamic and inform decision makers on how to produce desired results.
Less is more
While it can be tempting to measure everything on a project, in our experience, this leads to a lack of focus as it’s impossible to have control of so many outcomes. Instead have three to five clear and specific KPIs that focus on key objectives and business goals. The number of key metrics you choose should be directly influenced by the number of business goals you have. This is why it’s vital to pin down your benefits at the beginning of your project as discussed above. Once you establish strategies for these specific KPIs, you can extend the list.
Spend time on this process
Analysing data takes time and it’s important to get it right - especially when the numbers coordinate the next actions on the project. Don’t be afraid to put in additional time to select and analyse your KPIs regularly. Whichever way you look at it, if you don’t interpret data correctly, or don’t study it at all, your project suffers which may impact the wider business.
Concluding thoughts
There we have it. Our top tips for selecting the best KPIs for your project. Remember you do not have to manage every detail from the start. The best overall approach is to focus on the key metrics that will influence your project’s success -whether that be staying under budget, ahead of schedule or showing a return on investment - and stick with these through the duration of the project. Equally, have an appreciation that some metrics are indicators of performance and don’t give the full picture. Interpreting the data here and understanding its limitations is the final step to ensuring your project is a success.
Our team bring a wealth of experience in delivering project controls services, including robust and integrated reporting, so our clients can make proactive and informed management decision across a diverse range of projects and sectors.